A $37.9 million budget that includes 2 percent cost of living increases for teachers and step pay increases for eligible employees was approved last week by the York school board.
But the 2012-13 spending plan — based on the maximum property tax increase allowed under law — would need to be balanced by borrowing up to $1.5 million from the school district’s reserve fund, which currently stands at about $8.6 million, officials said.
The proposed tax increase, which would amount to $36 in taxes for each $100,000 in assessed property value for most local businesses, was not approved as part of the spending plan. School officials said the board will be asked to decide on the tax increase in August.
Superintendent Vernon Prosser, who referred to the budget situation as “the perfect storm” of rising costs and limited revenue, and finance diretor Amy Hagner noted that the district has borrowed from its reserve fund for the past two years and can’t continue to do so.
“We can’t continue to go to our fund balance,” Hagner said, referring to the reserve fund. If revenue doesn’t improve, she said, “we’re going to have to make some tough decisions.”
Board member Chris Revels referred to South Carolina’s Act 388 — a property tax reform measure approved by the state Legislature in 2007 that changed the way the state’s school districts are funded — before the board voted unanimously to approve the spending plan.
“This is the result of the inability of our legislators to look at overall tax reform,” Revels told a small audience gathered for the board meeting, “and they are killing our school districts.”
Under Act 388, South Carolina added a 1-cent sales tax and exempted owner-occupied homes from property taxes that pay for school operations. Owner-occupied homes continue to pay property taxes only for school debt service, while businesses pay property taxes for both school operations and debt service.
However, Hagner said the York school district’s debt service tax — which goes to pay off debt — would stay the same under the spending plan, so homeowners won’t see any change in school property taxes.
Hagner noted that the Legislature hasn’t yet approved funding for school districts across the state, so the budget is based on a Senate proposal of $2,012 in revenue per student.
If the budget approved by the Legislature changes and revenue is lower than expected, Prosser said, district officials would have to “go back to the drawing board” and prepare a new budget.
Prosser told board members that the 2 percent cost of living raise — for teachers only — is a state mandate. Step increases, which amount to about 2 percent, would also go to employees who are eligible for them.
To cut costs, Prosser said, five positions have been eliminated through attrition, including four teaching jobs at different schools and an administrative job at the district office.
A French teacher at York Comprehensive will become a part-time position, enabling French 2 and 3 students to finish the language program, and a teacher position at York One Academy will become a teacher’s aide job. French 1 will not be offered at the high school, Prosser said.
Hagner said a healthy reserve fund needs to be about 20 percent of a school district’s general fund expenditures. York’s reserve fund stands at $8.6 million, but the district will need about $700,000 to balance the 2011-12 budget, Hagner said. That will bring the reserve down to $7.9 million, or about 22 percent of the general fund, at the start of the 2012-13 budget year, she said.